Saturday, November 8, 2014

The virtual business man

Some people think that one has to literally own a business to grow wealth and live like the wealthy do but what some people fail to realize is that not everyone is cut out to run a business. Some people prefer the guaranteed paycheck that comes with a nine to five instead of the stress of worrying about when an invoice will be paid. Not everyone has the skill or temperament to run a business.
There are a lot of benefits to working a nine to five. If you are one of the lucky ones, you only work 40 hours a week and have your evenings and weekends to yourself. You get paid time off, sick days and holidays.
To live like the wealthy do, you have to first of all live within your means. You also invest in things that reduce your taxable income. For example the 401(k) retirement plan offered by employers to employees is an excellent way to reduce taxable income while growing your money in investment funds contained in the 401(k); by the time you start making withdrawals in retirement, your contributions plus income made on it and reinvested within the fund will be taxed in a lower tax bracket.
Making donations is another way to reduce your taxable income, and it doesn't have to be a cash donation.
Buying a home is also a good investment choice because a portion of your property taxes can be used to reduce you taxable income. In addition, your property value can grow thus increasing equity. Buying a home is sort of like forced savings. 
Investing in a mutual fund especially an index fund is another great idea because it makes you a virtual business owner; you are now a shareholder of the stocks or bonds of hundreds of companies within the fund.
Let's not forget about the good old fashioned savings account. While it does not build wealth as fast as investing. It is great for, as the saying goes, "saving for a rainy day". Having cash reserves is great for those unplanned emergencies and to save for large purchases.
So as one can see, one can still be an employee, act as a business man and grow wealth by utilizing retirement plans, investing in mutual funds, buying a home, making donations and saving.

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